“The other trend I would highlight is continued focus on QDI, which is qualified dividend income. Issuance of QDI-eligible preferreds has been increasing materially, and the percentage of the market that is QDI-eligible has been increasing overall. Accordingly, distributions from our funds have also been increasingly QDI-eligible. In recent years, our closed-end fund distributions have been in excess of 70% QDI-eligible. In the open-end fund, it has been up over 90% QDI-eligible.

The pickup in after-tax yield for QDI is very material and something that I think still isn’t fully appreciated. QDI distributions are reported annually to investors on Form 1099, with Box B separating out QDI-eligible dividends from regular dividends. To give you an example, if you use the highest tax bracket, a 5.8% pretax yield on a QDI preferred is a taxable-equivalent yield of 7.7%. This has been a very positive development in our market.”